Will We Ever See 100$+ OIL?

[Old-Ruffneck + 1,223]

30 minutes ago, D Coyne said:

Nobody in the oil industry wants to believe this, but US tight oil will peak in 2025.  As for the rest of the World, development will be much slower than the US, doubtful we will see the fast ramp up in tight oil that was seen in the US anywhere else in the World.

Nobody should believe your timelines of Doom, Despair, and Agony on the 3 major shale plays. Guessing timelines shows you really don't understand these major fields and the re-frackin' keeps the wells going. There is a thread on here explaining this. My "guess" would be 25 years + for peak. 

As for the rest of the world, if you can find a friendly nation like Guyana you see EXXon hitting it hard. There is still so much discovered oil in areas in South America, mainly Brazil, but no infrastructure yet to manage. That problem is everywhere. Find the oil and then gotta figure how to get to market. https://en.wikipedia.org/wiki/Yates_Oil_Field

[D Coyne + 305]

13 hours ago, Old-Ruffneck said:

Nobody should believe your timelines of Doom, Despair, and Agony on the 3 major shale plays. Guessing timelines shows you really don't understand these major fields and the re-frackin' keeps the wells going. There is a thread on here explaining this. My "guess" would be 25 years + for peak. 

As for the rest of the world, if you can find a friendly nation like Guyana you see EXXon hitting it hard. There is still so much discovered oil in areas in South America, mainly Brazil, but no infrastructure yet to manage. That problem is everywhere. Find the oil and then gotta figure how to get to market. https://en.wikipedia.org/wiki/Yates_Oil_Field

Old Ruffneck,

The refracking of wells might provide a bit of extra oil, but is only likely to be profitable for the top 3% of wells.

My "scenarios of doom" as you call them are based on the data we have to date on well output and USGS mean TRR estimates.

Some oil pros think my scenarios are wildly optimistic, others believe they are far too pessimistic. 

Such feedback suggests to me there are widely differing opinions, mine is somewhere between those who are very optimistic (sometimes referred to as cornucopians) and the "doomers" (or pessimists).  I think the middle view is likely to be more realistic.

Clearly nobody knows as it will depend on oil prices in the future which are unknown.

Note that when I do a discounted cash flow analysis of the tight oil plays with an assumed maximum oil price of $70/bo in 2018$, the peak is lower and economically recoverable resources (ERR) falls from 86 Gb to about 55 Gb for US tight oil output from 2010 to 2050.

Also note that the USGS mean TRR for US tight oil (ignoring economics) is about 100 Gb, but the EIA AEO 2019 has tight oil output at about 120 Gb, note that the economists at the EIA don't know which way the bit turns, so I tend to discount their estimates. 

http://peakoilbarrel.com/us-light-tight-oil-lto-update/

At link above is an older estimate for tight oil, before the recent USGS assessment of the Delaware basin section of the Permian.

Charts from revised scenarios below, with a higher "optimistic peak of about 11 Mb/d and the second with a lower more realistic peak of about 9.5 Mb/d, in both cases the URR is about 85 to 86 Gb

Edited July 14, 2019 by D Coyne

[Old-Ruffneck + 1,223]

1 hour ago, D Coyne said:

Also note that the USGS mean TRR for US tight oil (ignoring economics) is about 100 Gb, but the EIA AEO 2019 has tight oil output at about 120 Gb, note that the economists at the EIA don't know which way the bit turns, so I tend to discount their estimates. 

In 2016 USGS put whole Permian at 20bbl. Just 2 years later they re-estimated it :The Wolfcamp Shale and Bone Spring rock formations in the Delaware hold an estimated 46.3 billion barrels, the scientists said in their first assessment of the area. In addition, it holds about 281 trillion cubic feet of natural gas, about 18 times the amount in the Midland Basin, which is more heavily drilled and better known.The Midland and Delaware estimates are the USGS’s “largest continuous oil and gas assessments ever released,” Dr. Jim Reilly, the organization’s director, said in a statement. The amount consists of “undiscovered, technically recoverable resources,” the USGS said.

The study only looked at the two rock formations, which are both well known to operators including Exxon Mobil Corp., Royal Dutch Shell Plc, EOG Resources Inc. and Occidental Petroleum Corp. Industry experts say there are as many as a dozen so-called ‘pay zones’ in the area.

 

The Yates field in 100 years produced 1bb, re-estimated in 2018 to give up 1bbl more than thought. So when so called experts keep getting their numbers wrong, I tend to believe that several hundred billion invested in wells, billions in pipelines, someone aint telling the truth. You don't run 3 pipelines to the gulf for oil to last just 4 years. Doesn't make economic sense. 

The Delaware basin alone could yield more than 50bb, and that is just one piece of the Permian pie. Get calculate out and guess with it, at 200mb monthly how long to suck it dry. Trying to put a timeline of 4-5 years curve is incorrect imho. 

Edited July 14, 2019 by Old-Ruffneck

[D Coyne + 305]

21 minutes ago, Old-Ruffneck said:

In 2016 USGS put whole Permian at 20bbl. Just 2 years later they re-estimated it :The Wolfcamp Shale and Bone Spring rock formations in the Delaware hold an estimated 46.3 billion barrels, the scientists said in their first assessment of the area. In addition, it holds about 281 trillion cubic feet of natural gas, about 18 times the amount in the Midland Basin, which is more heavily drilled and better known.The Midland and Delaware estimates are the USGS’s “largest continuous oil and gas assessments ever released,” Dr. Jim Reilly, the organization’s director, said in a statement. The amount consists of “undiscovered, technically recoverable resources,” the USGS said.

The study only looked at the two rock formations, which are both well known to operators including Exxon Mobil Corp., Royal Dutch Shell Plc, EOG Resources Inc. and Occidental Petroleum Corp. Industry experts say there are as many as a dozen so-called ‘pay zones’ in the area.

 

The Yates field in 100 years produced 1bb, re-estimated in 2018 to give up 1bbl more than thought. So when so called experts keep getting their numbers wrong, I tend to believe that several hundred billion invested in wells, billions in pipelines, someone aint telling the truth. You don't run 3 pipelines to the gulf for oil to last just 4 years. Doesn't make economic sense. 

The Delaware basin alone could yield more than 50bb, and that is just one piece of the Permian pie. Get calculate out and guess with it, at 200mb monthly how long to suck it dry. Trying to put a timeline of 4-5 years curve of incorrect imho. 

Old Ruffneck,

Perhaps you believe that technically recoverable resources (TRR) will be equal to the URR, this is rarely the case in practice.

The USGS makes no estimate of future oil prices, it looks at what is technically possible to produce without considering profits.

For the Permian Basin I use the mean USGS estimate of all basins assessed so far which has a TRR of 75 Gb, Nothe Dakota Bakken/Three Forks and Eagle ford estimate is about 11 Gb each for a total of 97 Gb and I estimate about 10 Gb for the TRR of the rest of US tight oil (not including Eagle Ford or ND Bakken/TF).  So for US tight oil the mean TRR is about 107 Gb, but actual URR under the AEO 2018 reference oil price scenario is more like 85 Gb.  Chart below has AEO 2018 reference oil price scenario for Brent Crude.  If we assume this oil price scenario is correct the economically recoverable oil for US tight oil from 2010 to 2050 is about 86 Gb, so the ERR/TRR ratio is about 80%.

Oil pros often will tell me that I do not know future oil prices, and of course they are right. Note that the AEO reference oil price case has much higher oil prices than many of the people here believe will be the case, a lower oil price scenario ($70/b maximum oil price in 2017$) reduces US tight oil URR from 85 Gb to 59 Gb and the peak to 8 Mb/d in 2021, see chart below.

Edited July 14, 2019 by D Coyne

[BenFranklin'sSpectacles + 762]

On 7/9/2019 at 4:06 PM, Keith boyd said:

The United states has 10 years of oil reserves left, less and less as they ramp up production. 

 

Enjoy energy independence while it lasts. Peak oil was supposed to happen a decade ago but new technology created new reserves of recoverable oil and pushed the peak back for a while. Oil is still finite, and the mide east is chewing through their reserves too. Alternative energy sources will stretch out how long reserves can last but  I assure you in 100 years oil will be worth more then gold. We will never completely replace oil, at least not with something as good. 

The long-term upper limit on oil prices is the price of manufacturing it, which is approximately $100/bbl.  By the time the US runs out of crude, that could easily have fallen to $50/bbl. 

We've been through this before: every time oil prices spike, the world miraculously destroys demand and finds alternatives.  It would be a mistake to conflate short-term spikes with long-term set points. 

[Old-Ruffneck + 1,223]

9 minutes ago, D Coyne said:

Old Ruffneck,

Perhaps you believe that technically recoverable resources (TRR) will be equal to the URR, this is rarely the case in practice.

The USGS makes no estimate of future oil prices, it looks at what is technically possible to produce without considering profits.

For the Permian Basin I use the mean USGS estimate of all basins assessed so far which has a TRR of 75 Gb, Nothe Dakota Bakken/Three Forks and Eagle ford estimate is about 11 Gb each for a total of 97 Gb and I estimate about 10 Gb for the TRR of the rest of US tight oil (not including Eagle Ford or ND Bakken/TF).  So for US tight oil the mean TRR is about 107 Gb, but actual URR under the AEO 2018 reference oil price scenario is more like 85 Gb.  Chart below has AEO 2018 reference oil price scenario for Brent Crude.  If we assume this oil price scenario is correct the economically recoverable oil for US tight oil from 2010 to 2050 is about 86 Gb, so the ERR/TRR ratio is about 80%.

Well who can argue with a graph of this nature. It's all a guessing game and since I live part time in the Delaware basin/part of the Permian, most folks in the field who are living the oil dream know better than some geek behind a desk in NYC or wherever and stroking a keyboard.

[D Coyne + 305]

4 minutes ago, Old-Ruffneck said:

Well who can argue with a graph of this nature. It's all a guessing game and since I live part time in the Delaware basin/part of the Permian, most folks in the field who are living the oil dream know better than some geek behind a desk in NYC or wherever and stroking a keyboard.

As I suggested, this is simply a guess of future oil prices, the other "low scenario" has a different guess with oil prices no higher than $70/b in 2017$.  My crystal ball is on the shop, so not sure what future oil prices will be. 

No doubt there of lots of different opinions on future output, my opinion is based on well profiles today, rate of development in the past, well costs and operating costs based on what oil pros have revealed, mean estimates of resources by the USGS and different guesses of future oil prices.

Perhaps your insight from living in Texas (or perhaps New Mexico) gives you a better feel for future oil prices.  Tell me what future oil prices will be and I will tell you what future output might be.

[Old-Ruffneck + 1,223]

10 minutes ago, D Coyne said:

As I suggested, this is simply a guess of future oil prices, the other "low scenario" has a different guess with oil prices no higher than $70/b in 2017$.  My crystal ball is on the shop, so not sure what future oil prices will be. 

No doubt there of lots of different opinions on future output, my opinion is based on well profiles today, rate of development in the past, well costs and operating costs based on what oil pros have revealed, mean estimates of resources by the USGS and different guesses of future oil prices.

Perhaps your insight from living in Texas (or perhaps New Mexico) gives you a better feel for future oil prices.  Tell me what future oil prices will be and I will tell you what future output might be.

I lived in Ft. Stockton, Tx and worked on rigs there, then situation moved me to Lovington, NM. Circa (1978-1986). I didn't work on horizontal rigs as none were avail. I was mostly on deep hole rigs 15k feet plus. 

Pricing of WTI will range term (10) year 55bbl. In 10 years renewables will keep taking a steady chunk but not too significant. There will be ups and downs as there has been all these last 80+yrs. The more oil discovered in the world and getting to market will keep prices suppressed. This is just my opinion. Oil will be here and around for the foreseeable future. It just doesn't power truck,cars, planes etc. Of course, if Bernie, or Eliz Warren get in all bets are off. 

[BenFranklin'sSpectacles + 762]

On 7/10/2019 at 2:00 PM, nathan_john said:

Globally, oil makes up only 4% of the fuel used for power generation, majority is nat gas (26%) and coal (41%). So even with wind and solar making up 64% of the planned new generation, that doesn't displace oil hardly at all. Renewables and nat gas will mainly displace coal. Nat gas has already been displacing coal in the US over the last 20 years since it burns twice as clean and is cost effective. This is how the US has reduced it's carbon dioxide emissions by 12% since 2000 (nobody talks about this though).

Furthermore, I assume you're correct in saying that EVs show very strong growth. But globally only 20% of liquids demand goes to cars. The rest is plastics, heavy duty transportation, marine, aviation, etc.  You said yourself that you don't see oil getting over $70 a barrel which means gasoline will stay cheap keeping ICE vehicles cheap. So even if by 2040 EV technology is cheap enough for it to have 25% of the car market, liquids demand stays over 95 MBOED.

I agree with you 100% that renewable power and electric vehicles are part of our future. I just think your timeline is a little aggressive. It will continue to be a transition keeping oil demand high. Also, as mentioned earlier in the thread, reserves are not a good indicator of available oil. Per SEC rules, oil companies can only project 5 years of reserves and technology keeps improving that makes reserves continue to increase.  

To answer the question in the thread though, barring anything crazy, I don't see oil over $100 in the next 5 years. Not with US shale capacity and OPEC able to bring production back online.

A lot of info listed above comes from the BP and Exxon Energy outlooks (links below). Highly recommend for anyone and everyone.

https://corporate.exxonmobil.com/en/Energy-and-environment/Energy-resources/Outlook-for-Energy/Energy-supply#testUncertaintyProjections

https://www.bp.com/en/global/corporate/energy-economics/energy-outlook/demand-by-fuel/oil.html

http://www.globalcarbonatlas.org/en/CO2-emissions

It's a bit ironic that the media latched onto consumer electric vehicles because those are the second worst EV application.  If consumer EVs succeed, the only thing left for ICEs will be long-haul applications - and those will face pressure from natural gas & hydrogen. 

Some additional information to consider:
1)  There's a strong argument for converting aircraft to hydrogen or methane: they have higher specific energy, and weight dominates aerospace applications.  The industry is already working on electrifying short-range aircraft.  Aerospace electrification will expand as batteries improve. 
2)  Marine applications are already moving towards natural gas to meet emissions regulations. 
3)  Few - if any - fuel oil furnaces are installed in homes & businesses.  Those that remain will continue to be replaced.
4)  Batteries+renewables will replace diesel & fuel oil for electricity production.  This is one of the few applications where renewables truly make sense.
7)  Facilities to break petrochemical products back into crude are opening.  We'll be able to reuse 75+% of petrochemical products, which means we'll need <25% as much crude oil for them. 
8 ) Some petrochemical applications, such as lubricants, will continue to migrate towards synthetic products.  The performance benefits in those applications far outweigh the additional cost. 

Oil will be here for decades, but the peak is imminent.  After the peak, oil will experience a steady decline to economic irrelevance.  It will become an afterthought. 

[Michael Sanches + 187]

On 7/10/2019 at 4:06 AM, Keith boyd said:

 I assure you in 100 years oil will be worth more then gold. We will never completely replace oil, at least not with something as good. 

Disagree. Oil is simply carbon in a usable form. In your 100 year time frame we will be able to simply pick the weeds in our garden and power anything we want. The "Flux Capacitor" of Back To The Future will be a reality. Both oil and banana peels are higher energy forms of carbon, courtesy of the sun.and chlorophyll.

Hmmmm, in 100 years we should have the chlorophyll gene in bacteria with giant farms converting sunlight into sugars which are then used for power. Gotta love enzymes, God's gift to man, millions of times more efficient than normal chemical reactions. Funny - by then we will be talking of a CO2 defficiency in the atmosphere.

[Michael Sanches + 187]

15 hours ago, D Coyne said:

Tell me what future oil prices will be and I will tell you what future output might be.

Easy. Future oil prices will be the price that people are comfortable paying. The Law of Supply and Demand trumps everything (except bullets.) If the price goes above the comfort level, people will conserve, switch, and develop new alternatives. If prices go below the comfort level, people will find more applications for oil.

[D Coyne + 305]

22 hours ago, Old-Ruffneck said:

I lived in Ft. Stockton, Tx and worked on rigs there, then situation moved me to Lovington, NM. Circa (1978-1986). I didn't work on horizontal rigs as none were avail. I was mostly on deep hole rigs 15k feet plus. 

Pricing of WTI will range term (10) year 55bbl. In 10 years renewables will keep taking a steady chunk but not too significant. There will be ups and downs as there has been all these last 80+yrs. The more oil discovered in the world and getting to market will keep prices suppressed. This is just my opinion. Oil will be here and around for the foreseeable future. It just doesn't power truck,cars, planes etc. Of course, if Bernie, or Eliz Warren get in all bets are off. 

Old Ruffneck,

If you are correct then the low scenario shown in the chart below is more likely.  Note that $70/b Brent in 2017$ would be about $62/bo for WTI if the spread between WTI and Brent of the past 3 years continues into the future,  So in fact this might be an optimistic scenario if the mean USGS TRR estimate proves correct.  On the chart the low and high price scenarios are the same through 2021 and then they diverge.  The oil prices for the two scenarios are shown on right axis.

About 63% of crude plus condensate is used to power land transport (personal and commercial vehicles), oil will peak and decline and we will need to find alternatives to crude plus condensate whether battery electric vehicles(BEVs) or natural gas vehicles (NGVs).  This will be true regardless of who leads the US, POTUS has little effect on how much oil is produced.

[D Coyne + 305]

7 hours ago, Michael Sanches said:

Easy. Future oil prices will be the price that people are comfortable paying. The Law of Supply and Demand trumps everything (except bullets.) If the price goes above the comfort level, people will conserve, switch, and develop new alternatives. If prices go below the comfort level, people will find more applications for oil.

Michael,

You are correct there will indeed be an oil price.

[Abdkreem + 4]

Since my question was short-to mid term. Thoughts on this coming from IEA..........

 

https://www.bloomberg.com/news/articles/2019-07-12/oil-surplus-makes-surprise-return-despite-opec-cuts-iea-says

[D Coyne + 305]

4 hours ago, Abdkreem said:

Since my question was short-to mid term. Thoughts on this coming from IEA..........

 

https://www.bloomberg.com/news/articles/2019-07-12/oil-surplus-makes-surprise-return-despite-opec-cuts-iea-says

The IEA is very optimistic about US tight oil, it is not very likely it will continue to increase at the rapid rate of annual increase in 2018 (about 1800 kb/d), this seems to be what the IEA assumes and it is not a good assumption, for the past 7 months the rate of increase has been at an annual rate of about 350 kb/d (roughly one fifth the average annual rate of increase in 2018).

If the slower rate continues the IEA estimate is likely to be too high by about a factor of 5 for the increase in US tight oil output in 2019.  If oil prices rise (which most people here believe is unlikely) to say $85/bo for Brent by 2020, then perhaps tight oil will increase more quickly in 2020, if prices remain $70/bo or less, tight oil will increase more slowly (similar to the 2019 rate).

[Old-Ruffneck + 1,223]

3 hours ago, D Coyne said:

The IEA is very optimistic about US tight oil, it is not very likely it will continue to increase at the rapid rate of annual increase in 2018 (about 1800 kb/d), this seems to be what the IEA assumes and it is not a good assumption, for the past 7 months the rate of increase has been at an annual rate of about 350 kb/d (roughly one fifth the average annual rate of increase in 2018).

If the slower rate continues the IEA estimate is likely to be too high by about a factor of 5 for the increase in US tight oil output in 2019.  If oil prices rise (which most people here believe is unlikely) to say $85/bo for Brent by 2020, then perhaps tight oil will increase more quickly in 2020, if prices remain $70/bo or less, tight oil will increase more slowly (similar to the 2019 rate).

You do realize one major line is coming online soon to the gulf. Cactus line. So figure that into your equation. 2 more lines by end of 2020. They aren't going to be carrying water. So as soon as we can get lines run, production will increase 4 fold. This is the only reason we haven't seen a bigger explosion in barrels per day.

[ronwagn + 6,290]

On 7/9/2019 at 4:06 PM, Keith boyd said:

The United states has 10 years of oil reserves left, less and less as they ramp up production. 

 

Enjoy energy independence while it lasts. Peak oil was supposed to happen a decade ago but new technology created new reserves of recoverable oil and pushed the peak back for a while. Oil is still finite, and the mide east is chewing through their reserves too. Alternative energy sources will stretch out how long reserves can last but  I assure you in 100 years oil will be worth more then gold. We will never completely replace oil, at least not with something as good. 

Natrual gas is better in that it is cleaner, far more abundant, and at least a third cheaper than oil. There are already five times as many natural gas vehicles as there are electric cars in the world. The current fleet can be converted to natural gas. Oil will not be missed when it actually gets too expensive. That is a long way off though. 

Gasoline can also be made out of natural gas and coal so there are a lot of other possibilities. If electric vehicles become affordable natural gas will , most likely, be the fuel making most of the electricity. 

[ronwagn + 6,290]

On 7/15/2019 at 5:55 PM, Old-Ruffneck said:

You do realize one major line is coming online soon to the gulf. Cactus line. So figure that into your equation. 2 more lines by end of 2020. They aren't going to be carrying water. So as soon as we can get lines run, production will increase 4 fold. This is the only reason we haven't seen a bigger explosion in barrels per day.

It is strange that no one here considers that nations all over the world (especially China) will want to use all of the latest technology for oil exploration and drilling. I am sure they will surprise us eventually.

I look to natural gas as the long term answer but wind and solar will play a role also.

[Abdkreem + 4]

7 hours ago, ronwagn said:

It is strange that no one here considers that nations all over the world (especially China) will want to use all of the latest technology for oil exploration and drilling. I am sure they will surprise us eventually.

I look to natural gas as the long term answer but wind and solar will play a role also.

Excellent point. Many nations have significant shale oil and gas reserves and even if they dont possess the needed tech, Exxon and Chevron are lining up for contracts. Really silly of people to miss this point. Plus many of the nations where there is significant shale play do not possess the restrictive environmental legislation you will find in NA/EU.

[D Coyne + 305]

On 7/15/2019 at 6:55 PM, Old-Ruffneck said:

You do realize one major line is coming online soon to the gulf. Cactus line. So figure that into your equation. 2 more lines by end of 2020. They aren't going to be carrying water. So as soon as we can get lines run, production will increase 4 fold. This is the only reason we haven't seen a bigger explosion in barrels per day.

Old Ruffneck,

I agree that output will increase in the Permian Basin, currently output is roughly 4 MMb/d, so you expect a quadrupling to 16 MMb/d by 2020? 

Not happening. There is not that much pipeline capacity expansion planned and the planned pipelines may be more than is needed and may prove to be poor investments unless they can be converted to natural gas or NGL, it is unlikely that Permian output will increase to more than 8 Mb/d (roughly double today's output) and it won't reach that level until 2027 or so.  Output is likely to increase quickly over the next few years at an average annual rate of increase of about 750 kb/d over the next 4 years, reaching about 6.1 MMb/d in Permian basin by May 2022, the rate of increase will gradually slow down as the peak is approached at the end of 2027 at about 8 MMb/d

[Old-Ruffneck + 1,223]

1 hour ago, D Coyne said:

Old Ruffneck,

I agree that output will increase in the Permian Basin, currently output is roughly 4 MMb/d, so you expect a quadrupling to 16 MMb/d by 2020? 

Not happening. There is not that much pipeline capacity expansion planned and the planned pipelines may be more than is needed and may prove to be poor investments unless they can be converted to natural gas or NGL, it is unlikely that Permian output will increase to more than 8 Mb/d (roughly double today's output) and it won't reach that level until 2027 or so.  Output is likely to increase quickly over the next few years at an average annual rate of increase of about 750 kb/d over the next 4 years, reaching about 6.1 MMb/d in Permian basin by May 2022, the rate of increase will gradually slow down as the peak is approached at the end of 2027 at about 8 MMb/d

I was being 

fa·ce·tious

/fəˈsēSHəs/

adjective

adjective: facetious

1. treating serious issues with deliberately inappropriate humor; flippant.

   "a facetious remark"

   synonyms:

   flippant, flip, glib, frivolous, tongue-in-cheek, waggish, whimsical, joking, jokey, jesting, jocular, playful, roguish, impish, teasing, arch, mischievous No I don't really expect the Permian to 4 fold increase, but once the 3 pipelines are on and running I can see 5.5 as a good guesstimate, the only thing holding back more productions is takeaway. A lot of wells are not running full capacity, and reason DUC wells aren't completed. This is common information, get down there and talk with drillers, company men, pushers.  As an investor as I would assume you are I think I would like to see the goings on and what is happening in the "real" world and not staring at a screen and making graphs and telling us the oil will stop flowing in 4 years time.

Edited July 17, 2019 by Old-Ruffneck

[ronwagn + 6,290]

6 hours ago, D Coyne said:

Old Ruffneck,

I agree that output will increase in the Permian Basin, currently output is roughly 4 MMb/d, so you expect a quadrupling to 16 MMb/d by 2020? 

Not happening. There is not that much pipeline capacity expansion planned and the planned pipelines may be more than is needed and may prove to be poor investments unless they can be converted to natural gas or NGL, it is unlikely that Permian output will increase to more than 8 Mb/d (roughly double today's output) and it won't reach that level until 2027 or so.  Output is likely to increase quickly over the next few years at an average annual rate of increase of about 750 kb/d over the next 4 years, reaching about 6.1 MMb/d in Permian basin by May 2022, the rate of increase will gradually slow down as the peak is approached at the end of 2027 at about 8 MMb/d

This may be a stupid question but can excess oil lines ever be converted to natural gas pipelines? Has it ever been done?

[Old-Ruffneck + 1,223]

8 hours ago, ronwagn said:

This may be a stupid question but can excess oil lines ever be converted to natural gas pipelines? Has it ever been done?

I don't think the pressures from oil pipelines could take it. Remember the NGL is much colder and would imagine the lines welds aren't compatible. 

[John Foote + 1,135]

In Texas the Longhorn pipeline was build for carrying crude down towards Houston. Then in the 90s flow reversed to transport gasoline to El Paso, and now it is back to hauling crude towards the Gulf. But in each case liquids. Pipelines have their issues, but compared to the alternatives, are usually the best way to go. Even in oil and gas friendly Texas more than a few complained, but eminent domain rules.

In the case of the Permian taking oil offline for gas, even if possible, wouldn't make sense. Bringing more pipelines on line for oil is required as well. 

And even an oil pipeline can't carry all oil. One set up for low sulfur sweet oil is inappropriate for one built to handle sour oil. However the sour line can handle sweet. 

[Old-Ruffneck + 1,223]

9 hours ago, John Foote said:

And even an oil pipeline can't carry all oil. One set up for low sulfur sweet oil is inappropriate for one built to handle sour oil. However the sour line can handle sweet.

Correct, Loco Hills, Maljamar NM oil is loaded with bad bacteria that actually eats drill stem. Back in 82 my rig was plopped there and H2s is everywhere. Every 3rd hole they would bring xray truck out and check the drill stem. Today you can drive thru the area and see mounds of scrap casing, drill stem, pipeline from yesteryear. Nasty drilling there.